The Overnight Report: Positive Follow-Through

This story features BRICKWORKS LIMITED, and other companies. For more info SHARE ANALYSIS: BKW

Good morning.

Australian shares are poised for a positive opening on Thursday morning following yesterday’s session that was dominated by heavy portfolio switching that punished previous winners while share market laggards -resources!- swung back into fashion.

Overnight in the USA, shares were mostly lower, but iron ore is back on the move and so is gold, while oil has taken another break (down -2%-plus).

Base metals had a mildly positive session, held back by a stronger USD and remaining skepsis about China’s stimulus.

After the closing bell, shares in Micron Technology soared circa 13% after the company reported quarterly results that exceeded expectations for earnings per share and revenue.

Pre-Micron, US equities had mostly been looking for direction, with market observers noting there is at the moment no fresh catalyst to confidently move in either direction.

The S&P500 closed down -0.2%, while the Nasdaq managed a gain of less than 0.1%. Stocks in Europe where generally lower. US 10yr yields were 6bp higher around 3.79%, and the US dollar strengthened.

Sweden’s Riksbank cut rates by -25bp, as expected. The jury is still out whether the Swiss National Bank will cut by -25bp or -50bp later today.

 As per NAB commentary, US new homes sales declined a little less than expected in August after a July surge. The annualised rate of new home sales was 716k during the month, against expectations for 700k.

A shortage of existing homes for sale has boosted market share for new homes. Weekly mortgage applications showed another weekly gain, and while the level remains somewhat subdued, the fall in mortgage rates should continue to be a source of support for housing demand over the next couple of months.

The average 30-year-mortgage rate in the US declined by about -38bps to 6.35% during August.

On the calendar today, we’ll await the Q2 GDP revision in the US, August durable goods, weekly jobless claims, and pending home sales.

Investors will also hear from Fed chair Powell and NY Fed gov Williams.

Yesterday, the local August CPI indicator came in in line with expectations. The Indicator fell to 2.7% y/y from 3.5% y/y on fuel base effects and electricity subsidies.

Services inflation remained elevated at 4.2% y/y, while goods and non-tradables inflation fell, also driven by electricity.

On the calendar today:

-Aug job vacancies

-US 2Q GDP, durable goods

-Brickworks ((BKW)) earnings report

-WH Soul Pattinson ((SOL)) earnings report

-Vulcan Steel ((VSL)) ex-div 11.81c (95%)

-Air New Zealand ((AIZ)) AGM

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

Corporate news in Australia:

-Premier Investments ((PMV)) no longer looking to divest Smiggle in early 2025

– UK target Rightmove has yet again rejected REA Group’s ((REA)) improved takeover bid as undervalued

-Fortescue ((FMG)) signed a $4.06bn deal with Liebherr to create one of the world’s largest zero-emission mining fleets, the biggest contract for both firms

-Macquarie Asset Management ((MQG)) and Aware Super have secured a co-investor for their $6bn bid for TPG Telecom’s ((TPG)) fibre network

-Hanwha has abandoned its $1bn bid for Austal ((ASB))

-The Takeovers Panel rejected shareholders’ request to delay Energy Resources of Australia’s ((ERA)) capital raise

The Australian share market over the past thirty days

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

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